DO unable to break through key resistance level
Diamond Offshore Drilling Inc. (DO) Technical Analysis Report for Mar 26, 2020 | by Techniquant Editorial Team
Moving lower for the 2nd day in a row, DO ended Thursday at 2.02 losing $0.02 (-0.98%), notably underperforming the S&P 500 (6.24%). Closing below Wednesday's low at 2.04, the market confirmed its breakout through the previous session low after trading up to $0.39 below it intraday.
Daily Candlestick Chart (DO as at Mar 26, 2020):
Thursday's trading range has been $0.53 (24.42%), that's slightly below the last trading month's daily average range of $0.67. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for DO.
One bullish candlestick pattern matches today's price action, the Hammer. The last time a Hammer showed up on February 19th, DO actually lost -6.85% on the following trading day.
Unable to break through the key technical resistance level at 2.18 (R1), the share closed below it after spiking up to 2.18 earlier during the day. The failure to close above the resistance could increase that levels importance going forward.
Though the stock is experiencing a short-term uptrend, this might just be a correction, as both the medium and long-term trends are still bearish.
With prices trading close to this year's low at 1.22, downside momentum could speed up should Diamond Offshore break out to new lows for the year.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Resistance R1" stand out. Its common bearish interpretation has been confirmed for Diamond Offshore. Out of 448 times, DO closed lower 59.38% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 54.24% with an average market move of -1.57%.